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Blue Test One Fall07 - This exam has 15 questions Each is...

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This exam has 15 questions. Each is worth 7 points. It is printed on Blue paper. Finance 3000 Test One BLUE SPECIAL CODE September 18, 2007 33333333 1 Find the approximate value of the following bond: $1,000 par value; semi-annual payments; annual coupon rate of 5 percent; 20 year maturity; yield to maturity of 6 percent. 1) $1,723.44 2) $1,000.00 3) $901.76 4) $884.43 5) None of the above P/Y = 2 N = 40 I/Y = 6 PV = ??????? PMT = .05 * 1,000 ½ each payment (2 times a year) = 25 FV = 1,000 2 You have just graduated with $35,000 of student loans. The terms of the loans call for monthly repayment over ten years. The interest rate is 6 percent. What is the amount of your monthly payment? 1) $386.64 2) $388.57 3) $404.98 4) $1,081.15 5) None of the above P/Y = 12 N = 12 pmts a yr for 10 yrs = 120 I/Y=6 PV = 35,000 PMT = ??? FV = Pay off balance, so FV = 0
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This exam has 15 questions. Each is worth 7 points. It is printed on Blue paper. 3 You have signed up for a “balloon mortgage”. The terms are that the bank will give you $125,000 today and you will make monthly payments (based on 30-year amortization 5 percent APR) for the next 60 months. End of month payments. At the end of 5 years, you refinance the mortgage, paying off the balance on the original mortgage. What will be the amount due on the original loan? Round your answer to the nearest dollar. 1) $8,131 2) $10,214 3) $114,603 4) $114,786 5) None of the above P/Y = 12 N = 360 (monthly – 3*12) I/Y = 5 PV = 125,000 PMT = -671.03 FV = 0 P1 = 1 P2 = 5 th year would be 60 th pmt 4 You buy a 6 percent coupon, 20 year maturity bond with annual interest payments when the yield- to-maturity is 5 percent.
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